A taxpayer wants to donate stock held for 5 years to a public charity. The stock has a basis of $10,000 and a fair market value (FMV) of $30,000. The taxpayer's AGI is $100,000. If the taxpayer chooses to deduct the FMV of the stock, what is the maximum deduction allowed in the current year and the carryover period for any excess?

Answer options:

$50,000 deduction; 5-year carryover.

$30,000 deduction; 0 carryover.

$30,000 deduction; 15-year carryover.

$10,000 deduction; 0 carryover.

How to approach this question

Identify property type (LTCG property). Identify recipient (Public Charity). Limit is 30% of AGI for FMV deduction.

Full Answer

B.$30,000 deduction; 0 carryover.✓ Correct

IRC §170(b)(1)(C). Contributions of Long-Term Capital Gain property to 50% organizations (public charities) are deductible at FMV but limited to 30% of AGI. AGI = $100,000. Limit = $30,000. Donation = $30,000. The entire amount is deductible in the current year.

Common mistakes

Applying the 50% or 60% AGI limit which applies to cash/ordinary income property.

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